The Organization for Economic Co-operation and Development (OECD) has lowered its global economic growth forecast for 2023, and warned that many European countries could face a recession next year.
An OECD interim report released on Monday revised down the global GDP growth estimate from 2.8% to 2.2%, a drop it blamed on “Russia’s aggression against Ukraine.”
World GDP next year will be at least $2.8 trillion lower than previous projections, it said.
Insufficient supply diversification and demand reductions could cause shortages that will push up energy prices, dent confidence and financial conditions, and make it necessary for businesses to temporarily ration their gas use, the report added.
“Taken together, these shocks could reduce growth in the European economies by over 1.25 percentage points in 2023, relative to baseline, and raise inflation by over 1.5 percentage point,” the OECD said.
“This would push many European countries into a recession in 2023.”
It added that global inflation will increase by over 0.5 percentage point in 2023, with growth dipping by just under 0.5 percentage point.